New accounting costs RIL `40K-cr

New Delhi, Jan. 19: Reliance Industries Ltd has written down `39,570 crore in value of its oil and gas assets including the flagging KG-basin D6 block and US shale gas projects, in view of change in accounting policy.

RIL has restated its reserves following a change in accounting standards from April 1, 2016. It has moved from the Full-Cost Method (Indian GAAP) to the Successful-Efforts Method under IND-AS.

This has led to devaluation of its oil and gas assets by `39,570 crore as on March 31, 2016, according to RIL’s third quarter earning statement.

The write down investments reflects plummeting oil and gas prices. “The impact on account of change in accounting policy from FCM to SEM is recognised in the Opening Reserves on the date of transition and consequential impact of depletion and write offs is recognised in the Profit and Loss Account,” RIL said.

Major differences impacting such change of accounting policy are in the areas of expenditure on surrendered blocks, unproved wells, abandoned wells, seismic and expired leases and licenses, it said.

Transiting from one accounting method to another requires going back to the time when that asset was acquired and calculating its present book value if successful completion had been followed since then.

RIL has taken a `20,114 crore write-down on its KG-D6 block in the Bay of Bengal.

In Q3, the firm reported a pre-tax loss of `295 crore from its oil and gas business mainly because of “continuing decline in domestic production and weak price realisations”.

Gas price for KG-D6 reduced to $2.5 per million British thermal unit from $3.06 per mm Btu earlier. — PTI